2025 (4) TMI 492 - HC - GST

Omission of Rule 96(10) CGST Rules Invalidates Post-2024 Orders; Enforcement of January 2025 Order Stayed

HC held that following the unconditional omission of Rule 96(10) of the CGST Rules, 2017 on 8 October 2024, without any saving clause for pending ... Competence of respondent no. 2 to pass an order subsequent to the omission of the concerned rule - Rule 96(10) of the CGST Rules, 2017 - HELD THAT:- Having regard to the judgment delivered in the case of Kolhapur Canesugar Works Ltd. [2000 (2) TMI 823 - SUPREME COURT], it would transpire that the effect of omission of rule from the statute book is different from the effect of substitution of rule and the effect of amendment of a statute which is saved by a saving clause. It appears that the Hon’ble Supreme Court having noted the provisions of Section 6 of the General Clauses Act, 1897, had come to a finding that the exception contained in Section 6 of the General Clauses Act applies where any Central Act or Regulation made after commencement of the General Clauses Act repeals any enactment. It is not applicable to omission of a “rule”. Thus, the operation of repeal or deletion as to the future and past largely depend upon the savings applicable. In a case where a particular provision is omitted and in its place another provision dealing with the same contingency is introduced without the saving clause in favour of the pending proceedings then it can be reasonably inferred that the intention of the legislature is that the pending proceedings shall not continue but fresh proceedings for the same purpose may be initiated under the new provision. In the instant case, no new rule has been incorporated. On the contrary, rule 96 (10) has itself been omitted from the statute book without any saving clause, at least the parties at this stage have not been able to show anything to the contrary. The said provision of rule 96 (10) being omitted unconditionally, without a saving clause in favour of the pending proceedings, all actions from the date of such omission of the rule must stop. Having regard thereto, it is found that there was no scope for the respondent no. 2 to pass any order by invoking the provisions of rule 96 (10) of the said rules after the same was omitted on 8th October, 2024 without a saving clause in favour of the pending proceeding. Having regard thereto, and the petitioners having made out a prima facie case, the order impugned shall remain stayed till disposal of the writ petition. Conclusion - The order dated 30th January, 2025 is invalid due to the omission of Rule 96(10) and the order's enforcement pending the writ petition's resolution stayed. Liberty to mention for inclusion after expiry of the date for exchange of affidavits. 1. ISSUES PRESENTED and CONSIDEREDThe primary legal issue considered in this case is whether the respondent authority was competent to pass an order enforcing the provisions of Rule 96(10) of the CGST Rules, 2017 after the said rule had been omitted from the statute book. The secondary issue involves the validity of the order dated 30th January, 2025, which confirmed the demand for recovery of an erroneous refund of IGST availed by the petitioner.2. ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and Precedents:Rule 96(10) of the CGST Rules, 2017, provided conditions under which persons claiming a refund of integrated tax paid on exports of goods or services must comply. This rule was omitted from the statute book on 8th October, 2024, without a saving clause for pending proceedings. The legal question revolves around the application of the General Clauses Act, 1897, particularly Section 6, which deals with the effect of repeal on pending proceedings. The precedent set by the Supreme Court in Kolhapur Canesugar Works Ltd. v. Union of India highlights that the omission of a rule without a saving clause typically obliterates it from the statute book.Court's Interpretation and Reasoning:The Court interpreted the omission of Rule 96(10) as an unconditional removal from the statute book, meaning that any proceedings relying on this rule should cease unless a saving clause exists. The Court referenced the Supreme Court's decision in Kolhapur Canesugar Works Ltd., which established that the omission of a rule without a saving clause results in the cessation of related proceedings. The Court emphasized that the absence of a saving clause indicates the legislature's intention for pending proceedings to halt.Key Evidence and Findings:The evidence presented included the timeline of the issuance of the show-cause notice and the subsequent order. The show-cause notice was issued within the validity period of Rule 96(10), but the final order was passed after the rule's omission. The Court found that the proceedings initiated under the now-omitted rule could not lawfully continue post-omission.Application of Law to Facts:The Court applied the principles from the Kolhapur Canesugar Works Ltd. case to the facts, determining that since Rule 96(10) was omitted without a saving clause, the proceedings based on this rule could not continue. The Court concluded that the order dated 30th January, 2025, was invalid as it relied on a non-existent rule.Treatment of Competing Arguments:The petitioner's argument focused on the invalidity of the order due to the omission of Rule 96(10). The respondent argued that the proceedings were valid as they were initiated while the rule was still in force. However, the Court sided with the petitioner's view, emphasizing the lack of a saving clause and the legal precedent regarding the effect of rule omission.Conclusions:The Court concluded that the order dated 30th January, 2025, was non-est and should be quashed. The proceedings could not continue after the rule's omission, and the impugned order was stayed pending the writ petition's final determination.3. SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning:The Court stated, 'The normal effect of repealing of a statute or deleting a provision is to obliterate it from the statute book subject to the exception engrafted in Section 6 of the General Clauses Act.'Core Principles Established:The judgment reinforced the principle that the omission of a rule without a saving clause results in the cessation of related proceedings. It highlighted the importance of legislative intent and the absence of a saving clause as indicative of the legislature's desire to halt pending proceedings.Final Determinations on Each Issue:The Court determined that the order dated 30th January, 2025, was invalid due to the omission of Rule 96(10) and stayed the order's enforcement pending the writ petition's resolution. The respondents were granted the opportunity to file an affidavit-in-opposition, and the matter was left open for further proceedings based on the exchange of affidavits.